Selected Recent Bankruptcy Decisions

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U.S. Supreme Court

Central Virginia Community College, et al. v. Katz,  546 U.S. ______;  (2006)

DISPOSITION: Affirmed.
SYLLABUS: The Bankruptcy Clause, Art. I, §  8, cl. 4, empowers Congress to establish "uniform Laws on the subject of Bankruptcies throughout the United States." In Tennessee Student Assistance Corporation v. Hood, 541 U.S. 440, 124 S. Ct. 1905, 158 L. Ed. 2d 764, this Court, without reaching the question whether the Clause gives Congress the authority to abrogate States' immunity from private suits, see id., at 443, 124 S. Ct. 1905, 158 L. Ed. 2d 764, upheld the application of the Bankruptcy Code, 11 U.S.C. §  101 et seq., to proceedings initiated by a debtor against a state agency to determine the dischargeability of a student loan debt, see [*2]  541 U.S., at 451, 124 S. Ct. 1905, 158 L. Ed. 2d 764. In this case, a proceeding commenced by respondent Bankruptcy Trustee under § §  547(b) and 550(a) to avoid and recover alleged preferential transfers by the debtor to petitioner state agencies, the agencies claim that the proceeding is barred by sovereign immunity. The Bankruptcy Court denied petitioners' motions to dismiss on that ground, and the District Court and the Sixth Circuit affirmed based on the Circuit's prior determination that Congress has abrogated the States' sovereign immunity in bankruptcy proceedings. 
Held: A bankruptcy trustee's proceeding to set aside the debtor's preferential transfers to state agencies is not barred by sovereign immunity.

U.S. Court of Appeals for the Fourth Circuit

In re: Rare Earth Minerals, (4th Cir. 2006)

OPINION: WILKINSON, Circuit Judge:
In this case we consider the "statutory mootness" of an appeal challenging a bankruptcy court's authorization of the assumption and sale of an oil and gas lease. Section 363(m) of the Bankruptcy Code, 11 U.S.C. §  363(m) (2000), curtails the power of appellate courts to undo the authorized sale of estate assets to a good faith purchaser unless the sale has been stayed pending appeal. Plaintiff [*2]  here failed to obtain such a stay, and the district court consequently dismissed her appeal as moot. We affirm, because to hold otherwise would undercut §  363(m)'s express concern with the finality of bankruptcy sales.

 

Gregory v. Finova Capital Corporation, (4th Cir. 2006)

Opinion:  Appellee-noteholders filed a action suit against the principal lender of the now-bankrupt company that issued the notes.  The district court certifed the action.  However, there is a currently pending bankruptcy adversary proceeding dealing with most of the same questions at issue in the action.  We reverse the certification because, in light of the adversary proceeding, the action is not the supermethod for the fair and efficient adjudication of the controversy.

In re: French ,  (4th Cir. 2006)

OPINION:  This appeal presents the question of whether a United States bankruptcy court can avoid a constructively fraudulent transfer of foreign real property between United States residents. The transferees here argue that the presumption against extraterritoriality and the doctrine of international comity preclude application of the Bankruptcy Code. Both the bankruptcy court and the district court rejected these arguments and allowed avoidance. For the reasons that follow, we affirm.

Jacksonville Airport v. Michkeldel, (4th Cir. 2006)

Opinion:  Appellant Jacksonville Airport voted to reject the Chapter 11 plan of reorganization for appellee Michkeldel, Inc.  Michkeldel refused to count JAI's vote maintaining that JAI was not entitled to vote since its claim was not allowed under the Bankruptcy Code.  The bankruptcy court held that Michkeldel did not have to court JAI's vote, the district court affirmed.  JAI appealed.  Fourth Circuit affirmed.

U.S. District Court Eastern District of Virginia

Parker, et al. v. NC Agricultural Finance Authority , (E.D. Va. 2006)

Order sets aside settlement agreement and orders payment of attorney fees.

In re:  Boyd, 336 B.R. 277  (E.D. Va. 2005)

OPINION:
MEMORANDUM OPINION
This court is called upon to address the question of the effect of a discharge on an omitted creditor. Harold Ray Boyd filed a chapter 13 petition on June 7, 1999. Shortly thereafter, on June 19, 1999, John W. Carter was struck by an automobile owned by the debtor but driven by his son. The debtor had no insurance. In April 2000, Carter filed suit against the debtor. He obtained a default judgment against the debtor for $ 3,000,000 on July 17, 2000. Carter's insurance company paid him $ 70,000 under his own uninsured motorists coverage. The debtor converted his chapter 13 case to a case under chapter 7 on December 30, 2002 and was granted a chapter 7 dis-charge on April 25, 2003. No bar date to file proofs of claims was set in the converted case and it was closed as a no-asset case.

U.S. District Court Western District of Virginia

In re: Lineberry, (W.D. Va. 2006)

The matter before the Court is the Debtors' Application for Waiver of the Chapter 7 Filing Fee pursuant to 28 U.S.C. §  1930(f). This matter was heard on April 5, 2006. At that time, the Court raised a question with Debtors' counsel as to whether it should compare the Debtors' gross monthly income as reported on Line 3 of Schedule I or the Debtors' total combined monthly income as reported on Line 16 of Schedule I with the poverty guideline income published by the United States Department of Health and Human Services applicable to a family of the size involved. After due consideration of the facts and circumstances of this case, including the Debtors' financial condition and the applicable law, the Court concludes that it should use the [*2]  net income figure from Line 16 of Schedule I, but that for the reasons noted below the Application should be denied.

McDow v. Fenster, 2006 U.S. Dist. Lexis 10707 (W.D. Va. 2006)

Conclusion:  In reviewing de novo the bankruptcy court's consideration of factors other than those enumerated in Green, the court believes that the bankruptcy court correctly concluded that the list was not exhaustive. In addition, the court con-cludes that the bankruptcy court properly determined under Green that four factors weighed in favor of granting the motion to dismiss for substantial abuse, including the primary factor of the debtor's ability to repay his debts, and four factors weighed against granting the motion. A review of the totality of the circumstances leads this court to agree with the bankruptcy court that the weight of each set of factors was approximately equal. Given the conclusion that the rele-vant factors were in equipoise, the court believes that the bankruptcy court reasonably afforded controlling weight to the statutory presumption favoring relief. The bankruptcy court did not abuse its discretion in its application of the "totality of the circumstances" analysis. Accordingly, the decision of the bankruptcy court will be affirmed.

McDow v. Fulcher, 2006 U.S. Dist. Lexis 3043 (W.D. Va. 2006)

OPINION: MEMORANDUM OPINION

Before the Court is the United States Trustee's appeal from an order by the United States Bankruptcy Court, denying the Trustee's motion to dismiss the above-captioned case for substantial abuse. For the reasons set forth below, this Court will remand the case to the Bankruptcy Court for further proceedings.

I. PROCEDURAL HISTORY

On April 12, 2004, Appellees Michael Lee Fulcher and Anne Wesley Fulcher (collectively, "the Fulchers"), filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Code, 11 U.S.C. §§ 701, et seq.The U.S. Trustee reviewed Appellees' petition and schedules, and then filed a motion to dismiss the case for substantial abuse under 11 U.S.C. § 707(b). The Trustee argued that dismissal was appropriate because Appellees had primarily consumer debt and could pay off almost all of their debts to unsecured creditors through [*2]  a Chapter 13 repayment plan. 11 U.S.C. §§ 1301, et seq. (2004). The Trustee also contended that Appellees had substantially understated their income.

U.S. Bankruptcy Courts

In re: Evans , (Bankr. W.D. Va. 2006)

In re: Rife, (Bankr. W.D. Va. 2006)

Chapter 7 -The matter before the Court is the Motion to Remand filed by Susie Fern Rife, the Plaintiff, requesting this Court remand the matter to the Circuit Court of Buchanan County, Virginia and dismiss and close this adversary proceeding, or in the alternative, stay this adversary proceeding pursuant to 28 U.S.C. §  1334 and 1452(b). The Plaintiffs Motion to Remand was heard on March 7, 2006. At such time, the Court took the Motion under advisement and requested written argument from counsel. Both parties have since submitted [*2]  written arguments to the Court. The matter is now ready for decision. For the reasons set out below, the Court concludes that the Plaintiff's Motion to Remand should be granted.

In re: Hedrick: , 2006 WL 1653357 (Bankr. E.D.Va. 2006)

Chapter 13 plan confirmation orders are final orders binding on the parties.

In re: Almond, (Bankr. W.D. Va. 2006)

Chapter 7 case pre-BAPCPA - finances of debtors intertwined, but only one seeks relief.

In re: Jones Construction and Renovation, 337 B.R 579 (Bankr. E.D. Va. 2006)

MEMORANDUM OPINION

Hearing was held October 12, 2005, on the motion of Western Surety Company to approve payment to it of contract funds arising under two pre-petition construction contracts of the debtor, Jones Construction & Renovation, Inc. Western Surety also asserts its right to debtor's claim against the owners of one of the projects, Christopher Newport University. The trustee opposes the motion. Following argument at hearing, the court reserved ruling and requested the parties to submit proposed findings of fact and conclusions of law, which have now been received.

For reasons stated in this opinion, the court adopts the position asserted by Western Surety and will grant its motion.

In re: Jones, 2006 Bankr. Lexis 403 (Bankr. E.D. NC 2006)

The matter before the court is the Motion for Declaratory Judgment and, in the Alternative, for the Continuance of the Automatic Stay filed by the chapter 13 debtor, Thaddeus Rudolph Jones, Jr. The debtor, in his motion filed on January 17, 2006, requests the court to interpret the meaning of the phrase "with respect to the debtor" in 11 U.S.C. §  362(c)(3)(A), and determine whether the automatic stay will terminate under that section. If the court determines that the stay will terminate under that section, the debtor requests an extension of the automatic stay pursuant to 11 U.S.C. §  362(c)(3)(B).

In re Watson, Case No. 05-77864-DHA (Bankr. E.D. Va. 2005)

Court upholds the constitutionality of BAPCPA's credit counseling requirements.